Financial Statements of a company does not include

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Ratio Analysis

The financial statements of a company are the balance sheet, the statement of profit and loss (with the notes to accounts) and the cash flow statement. Ratio analysis is not a statement at all: it is a tool for analysing those statements after they are prepared.

Option (1) Balance Sheet — A financial statement. It shows the financial position of the company on a given date.
Option (2) Statement of Profit and Loss — A financial statement. It shows the result of operations for the period.
Option (3) Cash flow statement — A financial statement. It is prepared to show the movement of cash during the period.
Option (4) Ratio Analysis — Correct. It is the odd one out, a technique of analysis and not part of the financial statements.

NCERT (2026-27 edition):
Types of Financial Statements – “The financial statements generally include two statements: balance sheet and statement of profit and loss which are required for external reporting and also for internal needs of the management like planning, decision-making and control. Apart from these, there is also a need to know about movements of funds and changes in the financial position of the company. For this purpose, a cash flow statement is prepard.”

NCERT (2026-27 edition):
Ratio Analysis – “It describes the significant relationship which exists between various items of a balance sheet and a statement of profit and loss of a firm. As a technique of financial analysis, accounting ratios measure the comparative significance of the individual items of the income and position statements. It is possible to assess the profitability, solvency and efficiency of an enterprise through the technique of ratio analysis.”

NCERT (2026-27 edition):
Test your Understanding – II

Extract from the NCERT textbook